Not surprisingly, the precious metals markets came under significant pressure yesterday in the wake of a rather definitive improvement in global political and economic psychology and given no change in the trade situation overnight gold and silver look to remain under pressure to start today.
Obviously the news of a series of ministerial level trade talks in Washington over the coming four to five weeks combined with Chinese suggestions of a meeting in Beijing in October provides credibility to the safe haven liquidation argument. Further undermining the safe haven attraction of gold and silver are scheduled US data points yesterday that were clearly not indicative of an economy spiraling quickly toward recession.
However, the prospect of renewed economic anxiety should not be fully discounted until the US non-farm payroll reading passes this morning without disappointing results. Yet another undermining development for gold is the fact that Treasuries have come under massive liquidation pressure which reduces the "historically low interest rate/inverted yield curve" bullish arguments touted by the gold bulls throughout most of the last two months.
However, according to the World Gold Council, August produced a third straight month of gains in gold-backed ETFs and that follows a six-year high in July. The level of gold holdings in August was only 2% below or only 59 tonnes away from all-time highs which equated to a gold price of $1,665 an ounce in 2012.
On the other hand ETF's sold gold, silver and platinum holdings yesterday, with gold sales of 120,888 ounces and silver sales of 583,015 ounces. The sale in silver holdings was the largest single day sales since July 26th. In the end risk-on is bearish to gold and silver prices again today and "as expected" or "better-than-expected" payrolls will probably spark another wave of liquidation in gold and silver.
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